Stocks Brush Aside Record US Unemployment Surge

Stocks shot higher Thursday as investors brushed aside a record surge in US unemployment benefit claims, instead focusing on progress toward a massive stimulus plan and a pledge by world leaders for a "united front" in the fight against the coronavirus pandemic.

Federal Reserve Chairman Jerome Powell said the US central bank would continue to "aggressively" pump liquidity into the economy and added that "we're not going to run out of ammunition" to support lending.

The dollar fell against its main rivals on the developments.

But the Dow surged for a third straight session, rocketing up more than 1,350 points, or 6.4 percent, to 22,552.17.

Powell acknowledged there would be a sharp downturn as more and more countries confine people at home and close non-essential businesses to slow the spread of the respiratory ailment COVID-19.

In one of the latest indications of that impact, the US Labor Department said first-time unemployment claims soared to 3.3 million last week -- the highest number ever recorded.

That compares to 281,000 first-time filers in the prior week and blows away the previous record of 695,000 set in October 1982.

Investors had been expecting a staggering figure so "the shock value was mitigated a bit," said Briefing.com analyst Patrick O'Hare, who added that the size of the rally was likely boosted by end-of-the-quarter rebalancing to equities from bonds.

There was also movement on a massive $2 trillion stimulus bill, with the House of Representatives expected to vote Friday on the measure approved Wednesday by the Senate.

Meanwhile, G20 nations pledged a "united front" in the fight against coronavirus, saying they were injecting $5 trillion into the global economy to counter the pandemic amid forecasts of a deep recession.

Singapore's economy suffered its worst quarter since the financial crisis because of the coronavirus outbreak AFP / ROSLAN RAHMAN

"The united front from the world leaders helped market confidence, because as far as the West is concerned, the battle is in its infancy," said David Madden, a market analyst at CMC Markets UK.

The G20 pledge helped pull European stocks into positive territory. They had spent most of the day in the red after the international ratings agency S&P Global warned that the coronavirus will push Britain and the euro area into recession this year, with their economies expected to shrink by as much as two percent.

In Asia on Thursday, Tokyo's main stocks index ended down 4.5 percent after surging by almost one fifth over the previous three days, while Hong Kong shed 0.7 percent and Shanghai eased 0.6 percent.

Singapore lost more than one percent as the city-state said its economy contracted sharply owing to virus fallout.

Compared with the previous quarter, GDP dived 10.6 percent, as all sectors of the economy were battered.

The nation's economy is viewed as a barometer for the health of global trade.

"Singapore has kicked off the rounds of shockingly poor data," said Fiona Cincotta, an analyst at City Index trading group.

"This is merely giving us a taste of what's to come. The job market across the globe is about to turn very ugly," she added.